eToro vs. LiteForex

eToro is one of the first and largest social trading platforms. It allows you to connect with over 5 million active traders, and was voted "Best Social Trading Network" in 2012 and 2011 in the World Finance awards. Read our CopyTrader review or visit eToro.com to open an account online and see for yourself. LiteForex, an award-winning ECN broker, only recently launched it’s own copy trading platform.

Trader profiles

eToro provides a comprehensive view of each trader's performance history and appetite for risk, helping you make an informed copy decision:

Performance: expressed as the percentage change in a trader's equity, adjusted for deposits and withdrawals. This metric is calculated across all trades, including open trades, inline with industry standards. This presents a fairer picture of a trader's underlying performance. When performance is only calculated across closed trades, this can encourage some to delay closing loss-making positions in order to artificially inflate their metrics.

Risk: a number on a scale of 1 to 10, where 1 means very low risk and 10 means extreme risk. eToro's risk calculations follow industry standards and consider a trader's choice of instruments, leverage as well as the percentage of equity invested in a single instrument.

Trading: each user's trading card shows a high-level overview of his trading history and investment style, as well as his or her most frequently traded instruments.

LiteForex provides a more detailed view of each trader's trading history, however, we find that its measures of performance and risk are lacking.

Performance: ignores changes in equity brought about by deposits and withdrawals. However, as it is only calculated across closed trades, it fails to capture unrealized losses across open positions. Disappointingly, profitability is calculated as a Dollar amount from the moment the trader created his account and cannot be expressed in percentage terms over different timeframes.

Risk: LiteForex does not provide a measure of risk.

Trading: a detailed view of the trader's order book, as well as a breakdown of buy and sell orders across instruments since account opening.

Copying trades

eToro and LiteForex provide very different approaches to copying other investors' trades:

eToro (eToro.com): copy all trades (including open positions), or just new trades. From that moment onwards, your account will mirror the trader's activity, including changes in stop losses and take profits, and the closure of the trade itself. You can close a copied trade manually at any time, without ending the copy relationship. You decide, upon copying an investor, what proportion of your account's equity to commit towards that relationship. However, eToro prevents you from investing more than 20% of your account's equity in any one relationship to protect you from unforeseen losses.

LiteForex (LiteForex.com): only allows you to copy new trades going forward. However, it provides more flexibility then eToro with regards to order sizes. For example, you can choose to replicate a trader's positions on a one-for-one basis, investing exactly as many lots of the chosen trader, which has the potential to significantly increase your exposure. Alternatively, you can copy fixed amounts or express them in relative terms.

Trader rewards

Copy trading platforms will reward you when you share your trading activity with others and build a following:

eToro (eToro.com): earn 100% rebates on all your trades as well as 2% of your followers' Assets Under Management through eToro's Popular Investor Program. These earnings, which are in addition to your own trading profits, are credited monthly to your account and available for withdrawal.

LiteForex (LiteForex.com): earn a percentage of your followers' profits. Interestingly, you are able to set the commission freely. You may open more than one account to accomodate different trading strategies, and adjust your commission accordingly.

On balance, we feel that eToro provides a superior copy trading experience. Its user profiles provide a fairer view of each trader's performance because they measure profitability across all trades, including open positions. Its risk management tools also provide a more granular level of control and sensible default settings shield even new investors from rookie mistakes.

But don't take our word for it, visit eToro.com and LiteForex.com to see for yourself. Note that LiteForex accounts with bonus funds are not eligible for social trading. In contrast, all eToro accounts are eligible.

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